Absolutely agree that these are not ideal and caps the multiple BCL can command.
Regarding low cash flows, I agree that it has been on lower side but I did a comparison some time back with its PAT, the numbers were OK i.e. no red flags (Cumulative PAT of last 5/10 yrs not >>> Cumulative CFO) which would indicate Financial shenanigans. With the nature of business changing from low margin Edible Oil to mid-teens Distillery, we should expect higher cash flow. The same has been mentioned by Management (Mr. Mittal).
Product price is controlled by Govt, agree, but same Govt assures the uptake of its product, so we are assured of ~100% capacity utilization. Moreover, EBP is one of its pet projects and so many Ministeries keep harping about it, be it Petroleum, Transport or Farm. Right now, India has a deficit of Ethanol (if it has to reach 20%). Surplus Ethanol is few years later and do note that BCL’s manufacturing capacities are fungible between Ethanol and ENA. With the demographics of India and rising affluence, alcohol demand is only going to go up. I am not even considering Ethanol for Diesel.
I 100% agree that for BCL market cap to go up, earnings need to increase and like you said, FCI rice availability is the (only) hope in near term. Based on what I understood from the answer to my question to Mr. Mittal during Q&A, BCL doesn’t intend to use FCI rice even if it’s available. The benefit BCL will have in such a scenario (FCI rice is made available) is that since many Ethanol producers will shift to FCI rice, it will ease demand of Maize, thus reducing its price.
Disc: Invested so maybe biased
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